How Do You Find Your Setups?

[OsbourneCox 10]

I read a lot about people talking about having an edge and using setups but everyone is incredibly tight lipped about their actual setups for fear that describing the setup will eliminate the setup's success.

 

So coming up with one's own setups seems a bit daunting. How do people here come up with their setups?

 

• Do you find them in a book?
  
• Are they coming from some system you bought?
  
• Did you deduce your setup(s) from watching the market and backtesting it?
  
• Do you find them in a forum?
  

 

I've been trading on the side these past 15 months (I work from home) and I have learned a lot in that time. But my trading remains to a large part discretionary, i.e. - Not based on specific quantifiable setups. So this is my next area of improvement: Decide on, develop and implement trading strategies on specific setups.

 

As a start, I've started reading Street Smarts by Linda Raschke which details specific setups. (The only book that I've found that does so.) It's a start but I'm hoping for some suggestions to move the process along.

 

So how did you come up with your setups? Examples are always helpful, even if they are made specifically vague to hide the specifics of the actual setup.

[fxThunder 10]

I read a lot about people talking about having an edge and using setups but everyone is incredibly tight lipped about their actual setups for fear that describing the setup will eliminate the setup's success.

 

So coming up with one's own setups seems a bit daunting. How do people here come up with their setups?

 

• Do you find them in a book?
  
• Are they coming from some system you bought?
  
• Did you deduce your setup(s) from watching the market and backtesting it?
  
• Do you find them in a forum?
  

 

I've been trading on the side these past 15 months (I work from home) and I have learned a lot in that time. But my trading remains to a large part discretionary, i.e. - Not based on specific quantifiable setups. So this is my next area of improvement: Decide on, develop and implement trading strategies on specific setups.

 

As a start, I've started reading Street Smarts by Linda Raschke which details specific setups. (The only book that I've found that does so.) It's a start but I'm hoping for some suggestions to move the process along.

 

So how did you come up with your setups? Examples are always helpful, even if they are made specifically vague to hide the specifics of the actual setup.

 

Read this thread from start to finish.

 

http://www.traderslaboratory.com/forums/f208/reading-charts-real-time-6151.html

 

Cheers,

fxT

[brownsfan019 17]

^^ That is good advice. Great place to start.

 

As for how/when you find your reliable setups, for me personally I have found a couple things that work well for me and I focus on those. They were not the direct result of a book, webinar, class, etc. That's not to say that all the readings/studying I've done did not have an influence.

 

I think at some point you either find what works for you from all your 'stuff' or you don't. That stuff is the books, webinars, watching real-time charts, etc.

[Kiwi 16]

I am with the previous two posters.

 

You also need to find something that you personally can do well.

 

There are lots of ways to make money in the markets. But in many cases you will also find detractors and in all cases you will find that there were many who couldn't use them successfully.

 

So be prepared to have some failures. And don't necessarily blame the idea. You need to find the ones that work for you. At the risk of irritating James while he's losing sleep you might want to look at a couple of forex factory threads as well:

- no brainer trades

- james16

- TEB 5ema ...

- Strat's Stress free trading.

 

All ideas for possible success. In Thales thread don't just look at his ideas. Some alternatives are presented, at least one of which I can attest is very good.

[brownsfan019 17]

I am with the previous two posters.

 

You also need to find something that you personally can do well.

 

There are lots of ways to make money in the markets. But in many cases you will also find detractors and in all cases you will find that there were many who couldn't use them successfully.

 

So be prepared to have some failures. And don't necessarily blame the idea. You need to find the ones that work for you. At the risk of irritating James while he's losing sleep you might want to look at a couple of forex factory threads as well:

- no brainer trades

- james16

- TEB 5ema ...

- Strat's Stress free trading.

 

All ideas for possible success. In Thales thread don't just look at his ideas. Some alternatives are presented, at least one of which I can attest is very good.

 

Kiwi is right - what some can view as golden, others will view as rubbish - so you really do have to find what works for YOU and YOUR MENTALITY. Some want action all day, every day trading many times; others like myself want a handful of trades per day and that's enough. I find that I am trading less actual trades and just trading more size as time goes on.

 

To Kiwi - you may want to link to the part of Thales thread b/c 1) it's a huge thread and 2) the search function on TL is not very good.

[T2CTrading 10]

It sounds like you want to find some key set ups that you can personalize to be efficient in your trades.

 

Each set up will need to be specific to the market you trade and your trading parameters. My advice is to keep trying different setups until you find one that makes the most sense for you.

 

I have found it most helpful to back test or use a simulator to apply the set ups before trading them live.

 

Personally, I post some of my trades via twitter @futurescoach

[steve46 12]

Amazing comments

 

In order to find a way to make money in the markets you need some pre-requisites (very similar to taking classes at a college)...I assume you are working on the basics

 

1. General knowledge of the markets

2. Ability to use a spreadsheet

3. Basic math and statistics

4. Understanding of how to use your software.

5. Basics of Risk Management.

 

After that you will want to study your target market, and by that I mean you want to try and find underlying patterns of behavior that you can exploit...this is called "characterization" or "pattern analysis"..

 

What you may find if you do this right, is that markets exhibit repetitive behavior based on both time & price.....For example markets tend to "test" specific prices that some folks refer to as "key reference areas"....some of these key reference areas might include the open, high and low from the previous day, week, month...(just some examples)

 

Some traders make a business out of trading "price action"..some examples are entering long on retracements to a central reference point (like a 20 period moving average for example)

 

Others (like myself) like to wait for price to move to an extreme, based again on some reference or framework...at that point we enter looking for price to reverse back to a central reference point.

 

You have a lot of choices....so the first thing to do (just one man's opinion) is to begin doing research....

 

Good luck

Edited October 3, 2012 by steve46